Protecting Brand Equity
The marketing mix should focus on building and protecting brand equity.
For example, if the brand is positioned as a premium product, the product quality should be consistent with what consumers expect of the brand, low sale prices should not be used compete, the distribution channels should be consistent with what is expected of a premium brand, and the promotional campaign should build consistent associations.
Finally, potentially dilutive extensions that are inconsistent with the consumer's perception of the brand should be avoided.
Extensions also should be avoided if the core brand is not yet sufficiently strong.
Brands are growing ever more valuable. In this age of cross-border mergers
and acquisitions, the value of brands is also a key determinant of enterprise
value and stock market capitalization. Because this is also the age of
globalization, transnational corporations now depend for their success on
global brands as well as on a professionally managed, worldwide brand
portfolio. A decade of mergers and acquisitions has clearly demonstrated
that financial markets reward consistently focussed international brand
strategies. As a result, brand management has long since grown into
a vital ingredient for success in corporate strategy. On the other hand,
managing brand portfolios spanning the world’s markets is becoming an
increasingly complex business, as it entails respecting regional differences
in cultures and consumer habits without sacrificing the consistent values
and outlooks embodied in a brand.
As far as consumers are concerned, a brand plays a significant communicative,
informative role. It offers a compass to guide them through a
purchasing environment typified by a deluge of information. The brand is
seen by consumers as a sign of quality, helping them make their purchasing
decisions. Moreover, in the developed industrial and the newly
industrializing countries, brands have actually become part of how people
build up their identities and gain fulfillment in their personal lives.
.
Given increasing market deregulation and the associated trend toward
ever greater interchangeability in product ranges and prices, consumers
are benefiting from increased transparency in the information available
as they develop their own, self-assured preferences for particular brands.
Yet brand loyalty and established customer relationships can no longer
be taken for granted or assumed to last forever in an environment of
intensifying competition. Brand loyalty is vitally dependent on how
the relationship between the brand and the consumer is nurtured and
specifically developed: This is an area where investing wisely is sure to
pay dividends. A strong brand brings with it the opportunity to raise the
profile of a product and the company that sells it, setting them apart from
rivals in the marketplace. That strong brand can also command a price
premium for its producer, and can reduce price elasticity. All of which
makes brand-conscious customers the more valuable customers to have.
So the value of a brand, or brand equity, becomes a company’s most
important asset. But the questions are: How much is the brand actually
worth? And how can a brand’s value be boosted? Especially when corporate
mergers or acquisitions are in the offing, it is increasingly important for
the “due diligence” report on a company’s value to put a figure on brandequity. This term originated as a
business-financial concept, and consists
in “[the] net present value of all future net surpluses over his cash input
that the owner of a brand can earn”.1 Such financially-oriented measurement
of brand equity is a suitable approach for expressing it as a monetary value
as required for purposes of financial statements, licensing agreements,
acquisition decisions or the assessment of damages when intellectual
property rights have been infringed.
Yet the numerous brand equity valuations carried out focussing on different quantities such as earning capacity,
profit etc. yield totally different results. There is a wide variety
of models available for placing a monetary value on brand equity, but in
some cases these are controversial, and the value of their results as an
Objective statement may be limited.
The marketing mix should focus on building and protecting brand equity.
For example, if the brand is positioned as a premium product, the product quality should be consistent with what consumers expect of the brand, low sale prices should not be used compete, the distribution channels should be consistent with what is expected of a premium brand, and the promotional campaign should build consistent associations.
Finally, potentially dilutive extensions that are inconsistent with the consumer's perception of the brand should be avoided.
Extensions also should be avoided if the core brand is not yet sufficiently strong.
Brands are growing ever more valuable. In this age of cross-border mergers
and acquisitions, the value of brands is also a key determinant of enterprise
value and stock market capitalization. Because this is also the age of
globalization, transnational corporations now depend for their success on
global brands as well as on a professionally managed, worldwide brand
portfolio. A decade of mergers and acquisitions has clearly demonstrated
that financial markets reward consistently focussed international brand
strategies. As a result, brand management has long since grown into
a vital ingredient for success in corporate strategy. On the other hand,
managing brand portfolios spanning the world’s markets is becoming an
increasingly complex business, as it entails respecting regional differences
in cultures and consumer habits without sacrificing the consistent values
and outlooks embodied in a brand.
As far as consumers are concerned, a brand plays a significant communicative,
informative role. It offers a compass to guide them through a
purchasing environment typified by a deluge of information. The brand is
seen by consumers as a sign of quality, helping them make their purchasing
decisions. Moreover, in the developed industrial and the newly
industrializing countries, brands have actually become part of how people
build up their identities and gain fulfillment in their personal lives.
.
Given increasing market deregulation and the associated trend toward
ever greater interchangeability in product ranges and prices, consumers
are benefiting from increased transparency in the information available
as they develop their own, self-assured preferences for particular brands.
Yet brand loyalty and established customer relationships can no longer
be taken for granted or assumed to last forever in an environment of
intensifying competition. Brand loyalty is vitally dependent on how
the relationship between the brand and the consumer is nurtured and
specifically developed: This is an area where investing wisely is sure to
pay dividends. A strong brand brings with it the opportunity to raise the
profile of a product and the company that sells it, setting them apart from
rivals in the marketplace. That strong brand can also command a price
premium for its producer, and can reduce price elasticity. All of which
makes brand-conscious customers the more valuable customers to have.
So the value of a brand, or brand equity, becomes a company’s most
important asset. But the questions are: How much is the brand actually
worth? And how can a brand’s value be boosted? Especially when corporate
mergers or acquisitions are in the offing, it is increasingly important for
the “due diligence” report on a company’s value to put a figure on brandequity. This term originated as a
business-financial concept, and consists
in “[the] net present value of all future net surpluses over his cash input
that the owner of a brand can earn”.1 Such financially-oriented measurement
of brand equity is a suitable approach for expressing it as a monetary value
as required for purposes of financial statements, licensing agreements,
acquisition decisions or the assessment of damages when intellectual
property rights have been infringed.
Yet the numerous brand equity valuations carried out focussing on different quantities such as earning capacity,
profit etc. yield totally different results. There is a wide variety
of models available for placing a monetary value on brand equity, but in
some cases these are controversial, and the value of their results as an
Objective statement may be limited.